VAIDS boost for FG as revenue rises by 42%

As the Federal Inland Revenue Service (FIRS) prepares its legal team to tackle tax evaders in the country, its Voluntary Asset and Income Declaration Scheme (VAIDS) is now making waves having shot up the revenue profile of the Federal Government by 42 per cent.

According to the tax authority’s 2018 half year revenue performance report , tax receipts have improved significantly by 42 per cent, at least when compared with the same period in 2017.

The revenue performance report showed that the FIRS had already realised 75 per cent of its total target for 2018.

Commenting on the development, an economic expert, Dr Patricia Auta, told news agency that the improvement was the results of the present administration’s policies of expanding the nation’s tax base and blocking revenue leakages.

By this, and the Automatic Exchange of Financial Account Information (AEFAI) with other countries, Adeosun explained that the government now has the data on individuals and companies that are owing taxes.

She then advised offshore asset owners to utilise the VAIDS window to regularise their taxes before the March 31; the end of the amnesty programme.

“The offshore tax shelter system is basically over. Those who have hidden money overseas are being exposed and, while Nigerians can legally keep their money anywhere in the world, they must first pay any taxes due to the Nigerian Government so that we can fund the needs of the masses and create jobs and wealth for our people,” she said.

Reviewing the success of the programme some months back, Adeosun stated:

“We have had very good responses from companies. So far, we have received $110 million from just two companies. One of them paid a liability of $55 million, while the other paid $44 million. Let me give you an example.

We asked the Office of the Accountant General to send us the data of every payment over N100 million in the last five years. We then checked FIRS for the data on taxes they paid.

These government contractors had declared less than the amount the government actually paid them. This does not even include their other income streams which would have included the transactions they had done with the bank and personally. This was business with the government, yet they weren’t declaring their income aptly.”

Babatunde Fowler, the FIRS chairman, on his part, said VAIDS has generated N16.9 billion at the federal level alone as at the end of 2017.

VAIDS, which started last July with nine-month grace period, is a type of voluntary disclosure programme with the objective of giving a window to non-compliant taxpayers to regularise their tax position in form of registration, returns and remittance

The scheme gives a once in a life time opportunity to taxpayers to fully and honestly declare all their assets and incomes from all sources, which had previously not been exposed to the tax authorities, and to pay the tax due on those assets and incomes.

Giving reasons why the Federal Government came up with the scheme, a VAIDS consultant, Mr Niyi Adebayo, said the country’s tax-to-GDP ratio is about the lowest in the world. Nigeria’s tax to GDP ratio is just six per cent, while Ghana and South Africa are at 15 per cent and 24 per cent respectively.

Hear him: “Of 70 million economically active Nigerians, less that 10 per cent are on the Pay-As-You-Earn (PAYE) scheme and 96 per cent of this have their taxes deducted at source.

Only 214 Nigerians pay N20 million or more in taxes annually, and all of them are based in Lagos. At 21 per cent PAYE, this implies that only 214 Nigerians earn above 95.238 million annually. Fewer than 1,000 pay N10million or more in taxes, all but two are based in Lagos also. The numbers do not lie; people are not paying taxes.”

Adebayo blamed this low tax compliance level on the elusive harmonization of data of corporate and person entities between various government agencies.

“There is a lack of an industry and agency wide intelligence on financial and economic activities of tax payers and potential tax payers which has inhibited the efforts to drive an effective tax compliance regime.

There are multiple silos of data sited in multiple data centres across the country under the stewardship of several Ministries, Departments and Agencies (MDAs). “Because of the lack of substantive collaboration, authenticity, integrity and accuracy of data cannot be properly achieved. However, with the current data harmonization initiative sponsored by the VP’s office ,we can see the spotlight, though far, but visible.